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6-3 Six-Step Process

6-3.1 Step 1: Examine Mailpiece for Products

6-3.1.1 Process

Examine the mailpiece for products. Consider these two conditions and proceed as follows:

If the mailpiece is a product or contains a product, go to step 2.

If the mailpiece is not a product and does not contain a product, the content-based restrictions for products do not apply. You must next determine whether the mailpiece contains any advertising (discussed in steps 3 through 6). Skip step 2 and go to step 3.

6-3.1.2 Restrictions and Provisions

Under the law, the restrictions on mailing products at the nonprofit rates have an extremely broad reach. These restrictions can apply to merchandise, publications (such as books), and some periodical publications. For a discussion about the general provisions for mailing a product as well as the specific provision for mailing a periodical publication, see step 2.

6-3.1.3 Front-End and Back-End Premiums

A front-end premium is an item that an organization mails with a solicitation requesting a donation. A back-end premium is an item that an organization mails in return for a donation previously made to the organization.

Even though these premiums are usually connected with a donation to the authorized organization, they must be treated like any other product to determine eligibility for mailing at the nonprofit rates.

Examples: Product Rules Apply

For fundraising, authorized organization A sends a front-end premium - a mailpiece containing a box of greeting cards and a letter stating: "These cards are yours to keep. We ask that you consider sending a small donation to our organization." The greeting cards are considered a product. The product rules (steps 1 and 2) must be applied.

Organization B sends a letter to members seeking donations and stating: "Those sending $50 will receive a box of greeting cards." The greeting cards are called a back-end premium. If the greeting cards are mailed at the nonprofit rates, the product rules must be applied. (For consideration whether the solicitation letter is considered an advertisement, see steps 3 through 6.)

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6-3.1.4 Organization-Produced Material

The product rules consider material produced by the authorized organization as well as material produced by third parties, including other persons or organizations (whether for-profit or nonprofit organizations).

6-3.1.5 Publications

A publication is considered a product if it is sold or has a listed price or represented value. The following examples can help you determine when printed matter is considered a product.

Example: Product Rules Apply

Authorized organization B prints and distributes a quarterly publication. The publication is subsidized by membership dues, sold on newsstands, and printed with a cover price. The publication is considered a product because it is sold and has a cover price. The product rules (steps 1 and 2) must be applied.

Examples: Product Rules Do Not Apply

Every 2 months, authorized organization C mails a four-page newsletter to its members. This newsletter is not sold either on newsstands or by application of part of membership dues, and it does not bear a listed price. The newsletter is not considered a product. The product rules (steps 1 and 2) do not apply.

For fundraising, authorized organization D mails a catalog offering several items and includes information for ordering these items. The catalog itself is not sold and has no listed price. The catalog is not considered a product. The product rules (steps 1 and 2) do not apply.

6-3.2 Step 2: Determine If Products Meet Statutory Provisions

6-3.2.1 Process

Determine whether all products to be mailed meet one of the three statutory provisions listed in 6-3.2.2. Consider these two conditions and proceed as follows:

If one or more of the products do not meet any statutory provisions, the mailpiece is ineligible for mailing at the nonprofit rates.

If all products meet at least one statutory provision, go to step 3.

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6-3.2.2 Three Statutory Product Provisions

For a product to be eligible for mailing at the nonprofit rates, it must meet one of these three statutory provisions:

A low-cost item purchased or produced by the organization.

A gift or donation received by the authorized organization.

The organization's own publication that meets the basic eligibility criteria for a Periodicals publication.

As explained in 6-1.4, the eligibility standards for products are different than those for advertisements for products and services. Unlike advertisements for products and services, it is irrelevant whether the product is substantially related to one or more of the authorized organization's purposes or meets any of the other eligibility standards for advertisements. If the product meets one of these three statutory provisions, the product must still be examined to determine whether it contains advertising and whether the content-based restrictions for advertisements apply (steps 3 through 6).

6-3.2.3 Low-Cost Item

The determination of whether an item is considered a low-cost item - whether purchased or made by the organization - is based on the actual cost to the authorized organization or on whose behalf the product is distributed. If the organization subsequently resells the item, the price it seeks is irrelevant to whether it is considered to be "low cost" for purposes of this test.

The term low-cost item is defined in 26 U.S.C. 513(h)(2) of the Internal Revenue Code. Effective January 1, 2006, low-cost items were items costing no more than $8.60. At the beginning of each calendar year, the value of low-cost items is adjusted for changes in the cost of living. This information is published in the Internal Revenue Service's Internal Revenue Bulletin and, subsequently, in the Postal Bulletin and DMM.

Examples: Low-Cost Items

Authorized organization A prepares a mailpiece that contains a paperback book bought for $3. The book is eligible for mailing at the nonprofit rates - if it does not contain ineligible advertisements - because it meets the statutory product provision for low-cost items. It is irrelevant whether the book is related to A's primary purpose.

Authorized university U buys books for $20 each and plans to mail them to alumni. The book is ineligible for mailing at the nonprofit rates because it does not meet the statutory product provision for low-cost items.

Authorized college C buys for $3 each canvas tote bags bearing the college logo. College C plans to mail the tote bags to its alumni, each of whom pays the college $10 for the bag. The tote bag is eligible for the nonprofit rates because it meets the statutory product provision for low-cost items. The amount that an authorized organization pays for an item - not the amount at which the organization sells the item - determines whether an item is a low-cost item.

Authorized fraternal organization F buys materials to make notebooks. The notebooks cost organization F about $2 each, including labor, materials, and overhead expenses, making it a low-cost item. (If an authorized organization makes the product itself, the costs incurred by the organization determine whether the product is a low-cost item.) The notebook is eligible for the nonprofit rates because it meets the statutory product provision for low-cost items.

Authorized organization C sends a front-end premium - that is, a mailpiece that requests a donation and contains a box of greeting cards. The boxes of greeting cards cost the organization $3 each. The product is eligible for mailing at the nonprofit rates because it meets the statutory product provision for low-cost items.

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6-3.2.4 Gift or Donated Item

To qualify as a gift or donated item, the item must be obtained by the authorized organization at no cost. The actual cost to the donor is not considered. If the authorized organization, however, directly or indirectly compensates a third party, the item may not be considered a gift or donated item.

Example: Donated Item

Authorized organization C receives a donation of raincoats. The donor paid $15 for each raincoat. The raincoat is eligible for mailing at the nonprofit rates because it meets the statutory product provision for donated items even though the donor paid more than $8.60.

6-3.2.5 Periodical Publication

Periodical publications may be considered products if they are sold or have a listed price or represented value. By law, a periodical publication of an authorized organization is eligible for mailing at the nonprofit rates, provided that the publication does not contain an advertisement that is ineligible for mailing at these rates. To qualify as a periodical publication, the publication must meet these criteria:

Have a title.

Be published at regular intervals of at least four times a year.

Be formed of printed sheets.

Have an identification statement.

Have a known office of publication.

Meet the eligibility requirements prescribed for one of the Periodicals categories (e.g., a general publication, a requester publication, or a publication of an institution or society).

Be eligible for mailing as Standard Mail matter.

A periodical may also qualify for mailing at the nonprofit rates as a product if it is a low-cost item or a donated item. Because most periodicals are likely to be low-cost items, consider that statutory provision first before examining the publication for the periodical publication criteria.

Example: Low-Cost Publication

Authorized organization Q produces a publication twice a year that is available to subscribers at an annual rate of $15. The publication contains no ineligible advertisements. The publication is considered a product because it is sold, but it does not meet the criteria for a periodical publication exemption because the publication is not published at least four times a year (see 6-3.2.5 for other requirements). Organization Q's cost of producing the publication, however, is only $1 a copy. The publication is eligible for mailing at the nonprofit rates because it meets the statutory product provision for low-cost items.

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6-3.3 Step 3: Examine Mailpiece for Advertisements

6-3.3.1 Process

Examine the mailpiece (including any product) to determine whether it contains any printed or other matter that can be considered advertising for a product or service. Consider these two conditions and proceed as follows:

If the mailpiece contains no advertising, the content-based restrictions for advertisements do not apply and the mailpiece may be eligible for mailing at the nonprofit rates.

If the mailpiece contains advertising for a product or service, apply the appropriate test to determine whether the mailpiece qualifies for the nonprofit rates. (A conclusion that a mailpiece contains advertising does not disqualify it from being mailed at the nonprofit rates.) Go to step 4.

6-3.3.2 Definition of Advertising

As used in this publication, the terms advertising and advertisement mean any thing that "advertises, promotes, offers, or, for a fee or consideration, recommends, describes, or announces the availability of any product or service," as defined in 39 U.S.C. 3626(j).

6-3.3.3 Advertising Matter

Under the law, the advertising restrictions have an extremely broad reach. The content-based restrictions for advertisements apply to written and other material that promotes any product or service. These restrictions include the authorized organization's advertising of its own products and services as well as third-party advertising (for example, advertising for products or services of other persons, companies, or organizations).

Postal standards provide further guidance on what is considered to be advertising:

All material for the publication of which a valuable consideration is paid, accepted, or promised that calls attention to something to get people to buy it, sell it, seek it, or support it.

Reading matter or other material for the publication of which an advertising rate is charged.

Articles, items, and notices in the form of reading matter inserted by custom or understanding that textual matter is to be inserted for the advertiser or the advertiser's products in the publication in which a display advertisement appears.

A newspaper's or periodical's advertisement of its own services, issues, or any other business of the publisher, whether in display advertising or reading matter.

Examples: Listing Considered As Advertising

If an authorized educational organization advertises a seminar and states that the fee may be paid using the organization's affinity card, the announcement is considered an advertisement for the seminar and for the affinity card. Because the statement announces the availability and discusses potential uses of the organization's affinity card to get people to use it, the announcement must be considered an advertisement.

For fundraising, authorized organization Y sends members a mailpiece that includes this message: "We are selling delicious ABC Candy for only $5 per box for members only. Please call Jane Jones at 111-1111 with your order." Because the message contains promotional material describing the candy as "delicious ... only $5," the message is considered an advertisement.

Authorized organization X distributes information stating that it will host an educational seminar at a hotel (and includes the hotel's name, address, and room rates for those who may participate in the seminar). The information is considered advertising for the seminar because it is an attempt to get support for the seminar. The information is not considered an advertisement for the hotel unless the authorized organization receives consideration for publishing the information.

Authorized organization X will host a meeting at a hotel and includes in the organization's mailpiece a brochure received from the hotel and for which the qualified organization is compensated by the hotel to distribute at the nonprofit rates. The brochure is considered an advertisement for the hotel because the hotel paid to have the information distributed. In addition to the content-based restrictions for advertisements, the arrangement between the hotel and the authorized organization must be considered to determine whether the cooperative mailing rule applies (see chapter 5).

Examples: Nonadvertising

Authorized organization O mails a letter soliciting donations. The letter does not contain advertisements for products or services. Because requests for donations are not considered advertisements, the content-based restrictions for advertisements do not apply.

Authorized consumer organization XYZ mails a newsletter containing an article that discusses the merits and prices of insurance policies offered by companies O, P, Q, and R and lists telephone numbers at the companies for obtaining more information. Companies O, P, Q, and R do not pay organization XYZ or provide any other consideration for the newsletter article. Because companies O, P, Q, and R did not pay organization XYZ to publish the article, the article is not considered an advertisement.

Authorized organization A's mailpiece contains a solicitation for donations, with prize entry information and a notice that a product or service need not be purchased to enter the drawing for the prize. Because the recipient can enter the drawing without buying a product or service, the solicitation is not considered an advertisement for the prize.

Authorized organization E's mailpiece contains a solicitation for donations, sweepstakes entry information, and an announcement that the first 500 persons to return their sweepstakes entry form will receive a set of steak knives. The recipient may enter the sweepstakes regardless of whether he or she sends a donation. Because nothing is sold, the request for a donation is not considered an advertisement. Also, because the recipient is not required to make a donation to enter the sweepstakes, the announcement of the sweepstakes and the knife set is not considered an advertisement.

If an authorized organization solicits donations and announces that a donation may be paid by credit card, the mention of payment by that credit card is not considered an advertisement for the credit card unless a third party (e.g., the firm issuing the credit card) gives the authorized organization valuable consideration to mention the card. No consideration has been paid for mentioning the credit card as a payment option. Therefore, the reference is not advertising.

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6-3.3.4 Premiums

6-3.3.4.1 Front-End Premiums

A solicitation for a contribution or payment of membership dues announcing a front-end premium is not considered to be an advertisement for the premium. Example: Nonprofit organization A sends a solicitation to individuals seeking donations. The solicitation includes a set of address labels and states: "The enclosed labels are provided for you. Please use them regardless whether you send a donation to our organization." This solicitation is not considered to be an advertisement for the labels.

6-3.3.4.2 Back-End Premiums

A solicitation for a contribution or payment of membership dues that includes an offer for a back end premium (e.g., "If you donate $100, we will send you a free tote bag"), may be considered an advertisement for the premium unless the membership dues or requested contribution is more than four times the cost of the premiums offered and more than two times the represented value in the mailpiece, if any, of the premiums offered.

6-3.3.5 Determining What Product or Service Is Advertised

As explained further in the discussion of steps 4-6, there are different eligibility standards for advertisements based upon the specific product or service advertised. It is important to consider the advertisement to determine the product or service that is promoted.

If an advertisement generally promotes an advertiser's business, the advertisement is considered to promote the company's full line of products and services. In contrast, if the advertisement does not promote all the advertiser's products or services but only specific products or services, the advertisement is considered to promote only those specific products and services.

Examples: Specific Advertised Products and Services

Clothing store P sells a wide range of clothes for men and boys. It places an advertisement in a mailpiece mailed by the local Buddhist temple stating: "Clothing store P has a large stock of saffron robes starting at $50." This is considered to be solely an advertisement for saffron robes, rather than for the store's full line of clothing. (NOTE: If the advertisement also promotes clothing store P's general business with a statement such as "Serving all your clothing needs since 1960," it is considered to be an advertisement for P's full line of clothing.)

Supermarket S places an advertisement in a mailpiece of an authorized Jewish synagogue stating only: "A full line of Passover foods is sold in the store." This is considered to be an advertisement for the Passover foods sold at the store, rather than an advertisement for all items sold at the store.

A nonprofit organization's newsletter includes an advertisement for the Acme insurance company stating only: "Call one of our certified financial planners to discuss your future." This is considered to be an advertisement for financial planning. If the advertisement consisted solely of the name and telephone number of the Acme Insurance Company, it would be considered an advertisement for all insurance and other services available from the company.

A scientific organization's mailpiece includes an advertisement for the ACME Travel Agency. The advertisement states, "Call us for inexpensive flights to Europe." This is considered to be an advertisement for air transportation only, rather than one for all of ACME Travel Agency's services.

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6-3.3.6 Organization's Advertising of Its Publication

An authorized organization may advertise its periodical publication if it meets certain statutory requirements (see 6-3.2), regardless of the products or services advertised in the periodical publication. The publication itself may be mailed at the nonprofit rates if it complies with the product restrictions, if it is eligible for mailing as Standard Mail matter, and if it complies with the rules for prohibited and restricted advertisements (if the publication contains advertising).

6-3.3.7 Nonadvertising Matter

Under the law, these materials are not considered advertising:

References to membership benefits of an authorized nonprofit organization (see 6-3.3.8).

Acknowledgments of organizations or individuals who make donations to the authorized organization (see 6-3.3.9).

Public service announcements for which no consideration is received (see 6-3.3.10).

6-3.3.8 References to Membership Benefits

References to and a response card or other instructions for making inquiries about services or benefits available to members of the authorized organization is permitted, provided that advertising, promotional, or application material for such services or benefits is not included. (This standard is sometimes referred to as the "permissible reference" rule.)

For the purposes of this provision, descriptions of membership benefits available as a part of membership are permissible when they are included in a letter soliciting new members or in a letter asking current members to renew their membership as long as the descriptions constitute less than half of the letter. The benefits described can include any product or service that constitutes a membership benefit and the description may include contents that might be considered advertising in other contexts, such as adjectives, brand names, terms, conditions, and other material describing the product or service.

Caution: With one limited exception, the membership benefits may be described only in the solicitation letter or renewal request, and not in any separate brochure, circular, flyer, or other document. Exception: when the mailer prepares a single sheet describing the organization's membership benefits, the sheet may be included in the mailpiece along with the letter soliciting new members or membership renewals and considered to be part of that letter as long as the letter does not describe the membership benefits and only refers the reader to the separate sheet. (See CSRs PS-299 and PS-304.)

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6-3.3.9 Acknowledgments of Donors and Sponsors

A listing of sponsors, donors, or contributors is permissible and is a type of acknowledgment. Such a listing is not considered advertising if:

The listing of each individual or organization appears on a page under a heading such as "sponsors," "contributors," "donors."

The listing does not contain promotional material.

The listing is not labeled as advertising nor are the individuals and firms described as advertisers in other parts of the mailpiece.

A listing containing only the names of sponsors is not considered promotional, but the inclusion of the address, telephone number, other contact information, or additional information might be considered promotional, depending on its content. For example, if the listing includes such a line as "Acme Ice Cream Parlor, Our City's Favorite Ice Cream Parlor," the listing is considered an advertisement because the phrase "Our City's Favorite Ice Cream Parlor" is promotional. The phrase "Acme Ice Cream Parlor" is permissible if that is the name of the sponsor.

6-3.3.10 Public Service Announcements

Public service announcements (PSAs) are commonly found in Nonprofit Standard Mail material, especially periodical publications. These announcements are not treated as advertising. PSAs are announcements for which no valuable consideration is received by the publisher; which do not include any matter related to the business interests of the publisher; and which promote programs, activities, or services of federal, state, or local governments or of nonprofit organizations, or matter generally regarded as in the public interest.

Examples: Public Service Announcements

An authorized educational organization publishes this message in its mailpiece: "There will be a political forum in auditorium G for all citizens of county X. Come hear the candidates' points of view on topics that affect you." Because no valuable consideration was paid, the message is a public service announcement, not an advertisement.

Authorized organization B's mailpiece contains this statement: "Be prepared for the unexpected. Authorized organization D sells an automobile survival kit for $15." If organization B received no consideration for publishing the statement, the statement is considered a public service announcement, not an advertisement.

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6-3.4 Step 4: Determine Prohibited or Restricted Advertisements

6-3.4.1 Process

Determine whether the mailpiece contains any prohibited or restricted advertisements. Consider these three conditions and proceed as follows:

If the mailpiece contains any prohibited advertisement (that is, for a credit, debit, or charge card or similar financial instrument or account), the mailpiece is ineligible for mailing at the nonprofit rates. Note: phone cards; fare cards; financial planning services; stocks, bonds, and other securities are examples of products and services not considered to be financial instruments.

If the mailpiece contains any restricted advertisement (that is, for an insurance policy or travel arrangement), the mailpiece is ineligible for mailing at the nonprofit rates unless the advertisement meets the conditions described in this section.

If the mailpiece contains no prohibited or ineligible restricted advertisement but contains any other advertisements, go to step 5. If it contains no prohibited or ineligible restricted advertisements and no other advertisements, the content-based restrictions for advertisements do not apply, and if there are no other problems such as noncompliance with the cooperative mailing rule, the mailpiece is eligible for mailing at the nonprofit rates.

6-3.4.2 Insurance Policies

Material that advertises, promotes, offers, or, for a fee or consideration, recommends, describes, or announces the availability of any insurance policy is ineligible for mailing at the nonprofit rates unless these three conditions are met:

The organization promoting the policy is authorized to mail at the nonprofit rates at the office of mailing.

The policy is designed for and primarily promoted to the members, donors, supporters, or beneficiaries of that organization.

The coverage provided by the policy is not generally otherwise commercially available.

Insurance is not considered to be generally otherwise commercially available in the following circumstances:

The solicitation is targeted at individuals for whom that type of coverage is not available. Example: A mailing by a nonprofit organization offers health care coverage in a mailing targeted at individuals who, due to their age, health condition, or other reasons, cannot obtain health insurance from any other source. Although health insurance is considered to be generally otherwise commercially available in most instances, it is not in this case since the targeted recipients cannot obtain such insurance from another source. Accordingly, this mailing does not violate the restriction against mailing insurance solicitations at nonprofit rates.

The solicitation is for a charitable gift annuity. (See CSR PS-294.)

The coverage is provided by the nonprofit itself (e.g., a nonprofit fraternal beneficiary society exempt from the payment of federal income tax under section 501(c)(8)) that offers life insurance to its members and is also the insurer).

The coverage is provided or promoted by the nonprofit organization (e.g., a 501(c)(3) nonprofit endowment) in a mailing to its members, donors, supporters, or beneficiaries in such a way that the members, donors, supporters, or beneficiaries may make tax-deductible donations to the nonprofit organization of their proportional shares of any income in excess of costs that the nonprofit organization receives from the purchase of the coverage by its members, donors, supporters, or beneficiaries.

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6-3.4.3 Travel Arrangements

Material that advertises, promotes, offers, or, for a fee or consideration, recommends, describes, or announces the availability of any travel arrangement is ineligible for mailing at the nonprofit rates unless these three conditions are met:

The organization promoting the arrangement is authorized to mail at the nonprofit rates at the office of mailing.

The arrangement is designed for and primarily promoted to the members, donors, supporters, or beneficiaries of that organization.

The travel contributes substantially - aside from the cultivation of members, donors, or supporters or the acquisition of income or funds - to one or more of the purposes that constitute the basis for the organization's authorization to mail at the nonprofit rates.

6-3.4.3.1 Defining Travel Arrangements

The Postal Service does not consider an offering to involve a "travel arrangement" unless it includes three elements: transportation, accommodations, and a destination. The elements may be express or implied in the advertisement. For example, an announcement for a three day all-inclusive trip from New York to Las Vegas is considered a travel arrangement since the destination is expressly stated, and the accommodations and transportation implied. In contrast, an advertisement for a hotel only or only for airline tickets is not considered to involve travel arrangements since all three elements are not present. (See CSR PS-298.)

6-3.4.3.2 Entire Itinerary to Be Considered

In determining whether a travel arrangement contributes substantially to the organization's purposes, the Postal Service does not limit its consideration to the description of the travel arrangement that appears in the solicitation. Rather, it considers the full itinerary and other relevant circumstances. (See CSR PS-305.)

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6-3.5 Step 5: Determine If Mailpiece Meets Content Requirements for a Periodical Publication

6-3.5.1 Process

Determine whether the mailpiece meets the content requirements for a periodical publication. Consider these two conditions and proceed as follows:

If the mailpiece meets the four content requirements for a periodical publication (discussed in 6-3.5.2), the content-based restrictions for advertisements discussed in step 6 do not apply. However, you must consider whether the publication contains prohibited or ineligible restricted advertisements as discussed in step 4.

If the mailpiece does not meet the four content requirements for a periodical publication, go to step 6.

6-3.5.2 Content Requirements

To meet the content requirements for a periodical publication, the mailpiece must:

Have a title. The title must be printed on the front cover page in a style and size of type that clearly distinguish the title from other information on the front cover page.

Be formed of printed sheets. (The publication may not be reproduced by stencil, mimeograph, or hectograph processes; however, reproduction by any other process is permitted.) Any style of type may be used.

Contain an identification statement on one of the first five pages of the publication that includes these elements:

- Title.

- Issue date. The date may be omitted if it is on the front cover or cover page.

- Statement of frequency showing when issues are to be published (e.g., daily; weekly; monthly; monthly except June; three times a year in June, August, and December; annually; irregularly).

- Name and address of the authorized organization, including street number, street name, and ZIP+4® or five-digit ZIP Code™. The street number and street name are optional if there is no letter carrier service.

- Issue number. Every issue of each publication is numbered consecutively in a series that may not be broken by assigning numbers to issues omitted. The issue number may be printed on the front cover or cover page instead of in the identification statement.

- International Standard Serial Number (ISSN), if applicable.

- Subscription price, if applicable.

Consist of at least 25 percent nonadvertising matter in each issue.

Example: Identification Statement

Publication's title and number: CHURCH A WEEKLY BULLETIN (ISSN 1111111X)
Issue date: JULY 10, 1995 (may be omitted if on the front cover or cover page)
Statement of frequency: PUBLISHED WEEKLY
Authorized organization's name and address: CHURCH A
123 MAIN ST
WASHINGTON DC 20013-1111
Issue number: ISSUE NO. 30 (may be omitted if on the front cover or cover page)
Subscription price: (If applicable)

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6-3.5.3 Comparison With Other Tests

The test in this exception (meeting the content requirements for a periodical publication) is more liberal than the test required under:

The product rules (see 6-3.2.2) for mailing periodical publications.

The advertising rules (see 6-3.3) for advertising periodical publications.

That is, this exception requires that the mailpiece meet only the content requirements for a periodical publication rather than all requirements prescribed for a periodical publication.

For example, an organization's newsletter published three times a year does not meet the requirements for a periodical publication. However, if the newsletter meets the four requirements listed in 6-3.5.2 for "content requirements for a periodical publication," the advertised products and services in the newsletter do not have to be substantially related to the authorized organization's purposes.

Example: Eligible Advertisements

Because authorized labor union X publishes its newsletter three times a year, the newsletter does not meet the requirements for a periodical publication. However, because the newsletter meets all four content requirements for a periodical publication, the advertised products and services (other than those for financial instruments, travel arrangements, and insurance) in the newsletter do not have to be substantially related to one or more of the authorized organization's purposes, and the advertising restrictions do not apply.

6-3.6 Step 6: Determine Substantial Relatedness of Advertised Products and Services

6-3.6.1 Substantially Related Requirement: Relation to Other Rules for Advertisements

The "substantially related" standard does not apply to all mailings containing advertisements.

The "substantially related" standard does not apply to advertisements for travel arrangements, insurance policies, and financial instruments. (See step 4.)

The "substantially related standard" does not apply to other advertisements if the advertisement is part of material meeting the "content requirements for a periodical." (See step 5.)

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6-3.6.2 Process

For each advertised product or service subject to the "substantially related" standard, consider these two conditions:

If all the products or services advertised in the mailpiece are substantially related to one or more of the authorized organization's purposes, the advertisements are eligible for mailing at the nonprofit rates.

If any product or service advertised in the mailpiece is not substantially related to one or more of the authorized organization's purposes, the mailpiece is ineligible for mailing at the nonprofit rates.

6-3.6.3 Organization's Purpose

An organization's authorization is based on its primary purpose. Not all purposes shown in the organizational documents may be considered as qualifying purposes.

6-3.6.4 Determining Whether a Product or Service is Substantially Related

Except as set forth in 6-3.6.5, the determination whether a product or service complies with the substantially related standard is generally based on consideration of the nature of the product or service and qualifying purpose of the nonprofit organization. By law, the determination whether a product or service is substantially related to an organization's qualifying purpose is based on provisions in the Internal Revenue Code and standards established by the IRS and courts implementing those standards. If the organization is subject to the payment of unrelated business income tax (UBIT) on a product or service, it is not considered to be substantially related. However, the product may not be substantially related even if the organization is not subject to UBIT.

Since the determination whether a product or service is substantially related to an organization's qualifying purposes is generally based upon nonpostal law and nonprofit organizations should generally be familiar with this law in order to fulfill their tax obligations, the Postal Service generally relies upon nonprofit organizations to make the determination. Accordingly, where a nonprofit certifies compliance with this requirement on its postage statement the Postal Service will accept the mailing subject to appropriate measures if the certification is erroneous. The Postal Service urges nonprofits to consult with tax advisers or other appropriate parties as needed to ensure the accuracy of their certifications.

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6-3.6.5 Specific Nature of Articles Need Not Be Considered

Some advertising is considered substantially related to the organization's purposes, regardless of the specific nature of the product or service.

Advertisements for products and services, including products and services offered as prizes or premiums, are considered substantially related if the products and services are received by the authorized organization as gifts or contributions. Also, announcements of activities (e.g., bake sale, car wash, charity auction, oratorical contest) are considered substantially related if substantially all the work is conducted by the members or supporters of the organization without compensation.

Example: Substantially Related Advertisements

Authorized veterans' organization V receives a donation of reading glasses that the donor bought for $15 each pair. Organization V includes one pair of the reading glasses in the mailpiece and an advertisement stating that the organization has additional pairs of reading glasses for sale at $20 each. Because the reading glasses were a donation, they are considered substantially related to the organization's purposes. The advertisement for the reading glasses is thus eligible for mailing at the nonprofit rates. (The product rules must be used to determine whether the reading glasses are eligible for mailing at the nonprofit rates. In this case, the reading glasses are eligible for mailing at the nonprofit rates because they were donated.)

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